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Ask Dave

Bailing At The Wrong Time

John has seen a big drop in his 401k balance recently because of the stock market activity. He's considering a money move, but it might be a mistake.

QUESTION: John’s wife is 58 years old and has $250,000 in a 401k that has lost 20% this month. Should he move the money to different funds? Only if he wants to hurt himself, says Dave.

ANSWER: It’s normal to be scared when the markets are crazy like this and the media blows it out of proportion. But 97% of the 5-year periods and 100% of the 10-year periods in the stock market’s history have made money, and you’ve got time for this market to recover. You’ll be living off the income this money generates, so if I were in your shoes, I’d leave the money alone. I wouldn’t move a dime because of that statistic. You have to think long-term when investing.

Also, since 1978, the market has dipped 10% or more 10 times, and it has recovered within 2 years 90% of the time. You would get out at exactly the wrong time if you get out now.